Kraken, a cryptocurrency exchange, has filed 56 million crypto transaction forms with the U.S. Internal Revenue Service (IRS) for the 2025 tax year. Approximately 18.5 million of these forms were for transactions valued at less than $1, and over half were for $10 or less. The company notes that only 8.5% of the new Form 1099-DAs exceeded the $600 threshold, which triggers reporting for non-employee compensation, with 74% being for less than $50.
Each form is sent to the customer, creating a reconciliation task for the taxpayer. Standard tax software does not handle cryptocurrency transactions, resulting in an estimated additional burden of $250-$500 per year for active cryptocurrency holders. The Tax Foundation estimates that individual returns already cost Americans $146 billion in time and expenses, with the National Taxpayers Union Foundation reporting an average time of 13 hours and $290 per return for non-business filers. Brokers' reports for 2025 provide gross proceeds without cost basis, leading to client inquiries about incomplete data.
Kraken identifies two issues with the tax code: the lack of a de minimis exemption for cryptocurrency payments and the treatment of staking rewards as ordinary income at the moment of receipt. The company argues that buying small items with cryptocurrency can trigger a taxable event, requiring the calculation of gain or loss and reporting on Form 8949.
Similarly, staking rewards are taxed at the moment of receipt, based on the token's market price, even if the tokens are not sold. Kraken proposes a broader inflation-indexed exemption and the option to tax staking rewards at sale, rather than receipt.